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Armies of robots are spreading throughout factories and warehouses around the world, as the accelerating pace of automation transforms a widening range of industries.

And it is not just in advanced countries but in emerging economies as well where machines are a growing force, with global sales of industrial robots increasing by 18 per cent to a record $13.1bn in 2016, according to research by the International Federation of Robotics, IFR.

The rise of the robots has coincided with a surge in share prices of some of the biggest manufacturers in the sector, including the Japanese groups Fanuc and Yaskawa, Swiss engineering conglomerate ABB and Kuka of Germany.

Shares in Yaskawa have more than doubled this year, as have Kuka’s. Fanuc’s stock has gained 40 per cent and shares are up by almost one-sixth in ABB, which additionally supplies power, automation and electrical equipment.

These groups are benefiting from mounting demand for sophisticated machines that no longer just weld car bodies and lift heavy loads, but also perform complex functions from electronic component production to putting chocolates into boxes.

Chart: Proliferation of industrial robots

Another trend is the increasing range and type of robot, as they vary from flexible mechanical limbs to smart machines that can work alongside humans. Collaborative robots, or cobots, are specifically designed to interact with people.

“The robotics market has been growing strongly over the past four to five years, and we are optimistic that the market is going to continue to grow over next three years,” says Per Vegard Nerseth, head of robotics at ABB.

The spread of robots has piqued the debate over the suitability of humans versus robots as workers, with some leading business figures warning that more machines will take jobs.

John Cryan, chief executive of Deutsche Bank, said in September that employees faced being replaced by robots, adding that a large number of people will lose their jobs as a result of changes in technology.

“Generally, it is about cost arbitrage,” says Moshe Vardi, a professor at Rice University in Texas. “If the marginal hourly cost of an industrial robot is lower than the hourly cost of a human worker and the robot have the capability to do the job, then it makes sense economically to automate.”

Research by consultants McKinsey has contributed to these fears of job losses. It found that about 30 per cent of tasks in 60 per cent of occupations could be automated.

A Kuku robot pours beer in a demonstration of its precision abilities © AFP

However Mr Nerseth argues that rather than destroying jobs, advanced automation is partly a response to a shortage of skilled manual labour, with robots often filling “dull, dirty, dangerous and delicate” roles that people simply do not want.

“Today the main challenge for very many companies [is] they’re not able to find enough people to do the jobs and in that sense robots actually create jobs,” he says.

“It’s very difficult to see today that robots are actually taking

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away. I would say we are helping companies to become more competitive and efficient.”

Countries with the lowest unemployment rates tend to have the highest density of robots, he adds. At the other end of the spectrum are nations ripe for greater adoption. Despite being the largest robot market, China is below the global average density with just 68 robots per 10,000 manufacturing workers.

However, putting aside job fears, robots are clearly here to stay in an automation revolution that is driven by a desire for greater efficiency and speed in industrial processes, say industry experts.

As components become smaller and more complex, robots can provide vital functions as they can handle the intricacies of manufacturing in ways humans cannot. Robots are also improving the quality of goods in an age of rising standards.

An important force behind adoption is the falling cost of robotics systems. At the same time, breakthroughs in robotics technology are combining with the increasing level of electronic communication between equipment and computers in factories, sometimes called the industrial internet of things.

Another factor helping the growth of robots is a shift in some industries from producing a small variety of goods in large batches, to a greater mix of products in smaller batches, says Mr Nerseth of ABB.

“This is basically driven by us as consumers . . . we want more individualised products [and] that drives a need for flexibility,” he says, giving the example of cars with parts like wheel rims with customised colours.

Although the largest user remains the car industry, which has deployed robots widely since the 1980s for welding and painting, the main driver of growth is the electronics and electrical sector, chiefly located in Asia.

Chart: Robots spread across industries

Part of that is down to the increasing need for batteries, chips and displays, according to the IFR. But robots are also entering other areas, such as logistics warehouses, chemicals and plastics factories and the food and beverage industries.

In total, almost 300,000 units were sold worldwide last year, according to the IFR, with three-quarters bound for just five countries: China, South Korea, Japan, the US and Germany.

Three in every 10 went to China alone. Once the manual labour “workshop of the world”, it has been the largest buyer of industrial robots since 2013, and its purchases jumped by 27 per cent last year. There were increased investments in many developing countries, as well, such as Taiwan, Thailand, India and Mexico, as well as in Italy and France.

While there have been improvements in hardware capabilities, such as hydraulics and mobility, perhaps the most important developments are in sensors and software that are making robots more sensitive, flexible, precise and autonomous.

“The software side of industrial robotics is becoming more and more important [and] a key differentiator between the different industrial robotics manufacturers,” says Jonathan Cohen, portfolio manager of the $90m RoboCap UCITS fund.

It also represents a richer seam to mine. Including the cost of software, peripherals and systems engineering, the total value of the robotics systems market is estimated at about $40bn by the IFR.

Important advances include vision recognition systems. Coupled with artificial intelligence and cameras, this allows robots to identify objects and learn from experience to improve performance, enabling a wider range of applications.

In parallel, manufacturers have developed grippers with greater dexterity and responsiveness. Tom Bouchier, managing director of Fanuc UK, gives the example of confectionery makers using robots to pick and place sweets and chocolates into boxes.

However, despite the growth in the market and investor enthusiasm, experts do not foresee machines taking over the workplace as robots still have many limitations when it comes to dexterity, judgment and the ability to improvise.

“The biggest challenge is the flexibility a robot can offer,” says Daniel Kuepper, of Boston Consulting Group. He gives the example of an empty box of screws that a replenishment system has failed to refill.

“A robot would now need to detect the box is empty and send an error message, while a human operator would do that and quickly pick up some new screws.”

Cobots learn from human masters

As people worry about being relaced by robots on the factory floor, the irony is that machines are beginning to learn new tasks from humans by imitation. This has opened up big possibilities for companies as they look to automate and improve efficiency.

For example, by moving the robot’s arm, a flesh-and-blood employee can train it within minutes, as opposed to 50 to 200 hours of programming for a traditional industrial robot, says Jonathan Cohen of the RoboCap UCITS fund.

“With a cobot [a robot that works with humans], you don’t need a programmer any more. Anyone can do it, it’s very user-friendly. You just move the hands, press record, do it for a few minutes, then the machine can do it autonomously,” he adds.

Cobots are also smaller, lighter, more flexible and mobile, and even more critically cheaper, making it more affordable for small and medium-sized enterprises to invest. While usually slower, they have greater adaptability, because they can be assigned to different tasks.

Although still a fairly small subsegment within industrial robotics, the cobot market is rapidly expanding.

A significant manufacturer is Universal Robots, based in Denmark, which was acquired by Teradyne of the US for $285m in 2015. It expects to reach DKr1bn ($157m) in revenue by the end of this year, up from DKr40m ($5.6m) in 2011.

Michael Pooler

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